Car insurance is a financial safety net that saves you from paying the full expenses that arise after a car accident, vandalism, damage, or theft. There are multiple types of car insurance you can purchase that will cover your vehicle, yourself, your passengers, and others on the road.
Understanding the various types of car insurance coverage and their associated terms will help you decide what coverage is right for you.
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6 main types of car insurance
While many types of coverage are optional, some car insurance is necessary based on where you live and if you’re financing or leasing your vehicle. These are the six major types of auto insurance.
1. Collision insurance
Collision insurance covers damages to your vehicle due to an accident – whether you’ve collided with another car or hit a tree or telephone poll in a single-car accident. If your car is beyond repair, collision insurance will reimburse you based on the actual cash value of your vehicle – minus your deductible. Collision insurance is not state-mandated but is usually required to have if you’re financing or leasing your car.
2. Comprehensive insurance
With comprehensive insurance, your insurance company will pay for your car to be repaired or replaced following non-collision incidents, such as vandalism, theft or damage from natural disasters. Comprehensive coverage also covers damage to your vehicle if you’ve hit an animal on the road. This type of insurance isn’t mandatory but also is often required by your lender if you have a car loan.
3. Liability insurance
Liability insurance pays for medical expenses and car repair costs for others in accidents you cause. It won’t cover your bills, but rather the expenses of the person or people you hit. Every state except New Hampshire and Virginia requires drivers to purchase – and maintain – liability insurance when they register a vehicle. It typically has two components, bodily injury liability and property damage liability coverage. Required minimum liability limits vary by state.
4. Medical payments (MedPay)
Medical payments insurance – also known as MedPay – covers injury-related expenses for you and your passengers following an accident, even if you were at fault. It can help pay for ambulance fees, health insurance deductibles, and funeral costs in addition to your regular doctor’s bills or hospital bills. MedPay is only required in three states but most states offer it as optional coverage. It is similar to personal injury protection insurance coverage but less comprehensive.
5. Personal injury protection
Personal injury protection – also known as PIP – is insurance that covers injury-related expenses for you and your passengers if you’re in an accident, regardless of who is at fault. In addition to your medical costs, it can cover lost wages, at-home care, childcare costs, and funeral expenses. Personal injury coverage is required in about 15 states, including "no-fault" states where drivers are required to file a claim with their own insurance company after an accident, even if they didn’t cause it. For this reason, PIP is sometimes referred to as no-fault insurance.
6. Uninsured motorist insurance/underinsured motorist insurance
Uninsured motorist insurance covers bills from your injuries – and property damage, depending on the type of coverage – if you get in an accident caused by someone who does not have auto insurance, aka an uninsured driver. Underinsured motorist insurance is similar, but it helps to cover your expenses when you’re in an accident caused by someone who doesn’t have enough insurance. Nearly half of all U.S. states require drivers to have uninsured motorist coverage. Uninsured motorist coverage is sometimes bundled with underinsured motorist coverage.
Click here to These are the minimum car insurance requirements in all 50 U.S. states
10 additional types of auto insurance coverage
Alongside the main types of car insurance, you may choose to purchase additional coverage options to further protect yourself and your vehicle.........
